Money

How To Stop Paying The ‘Lazy Tax’

Inspired by Powershop Switch and you could save with Australia's Greenest Power Company (as ranked by Greenpeace).

It happens to the best of us: a pay cheque lands in your bank account and next thing you know, you’re broke (and you’re not quite sure where all that money’s gone).

You’re probably siphoning off the majority for necessities like rent and groceries but chances are a chunk of your pay is going towards things you haven’t even noticed.

Friends, you’re likely paying the ‘lazy tax’, wasting your hard-earned cash on things either due to convenience, a lack of planning, or simply because you don’t track what you spend.

But it’s not all bad news: according to Tim Howard, Financial Literacy Specialist at BT Financial Group, the abundance of free financial information online is a powerful thing. “Millennials have the opportunity to become more financially savvy, empowered and literate than previous generations,” he says.

Howard’s top tip for kicking that lazy tax is to keep a close eye on your spending. “You might think you know how much is coming in and going out, but you really don’t unless you map it all out.”

After that’s out of the way, check out this list to help take charge of your dollars. Your future self (and your bank account) will thank you.

#1 Manage subscriptions the smart way

We get it: it’s the Golden Age of TV, Taylor Swift’s new album just dropped, and you need to access that content. That’s all well and good, but there’s no point paying for online subscriptions that you don’t actually use.

Unsubscribing from a new online streaming service is as easy as signing up. But all too often, the daily grind means that another unused subscription simply slips past unnoticed, and a few monthly instalments later it’s clear that’s money down the drain.

Whether it’s Stan versus Netflix, or Apple Music vs Spotify, sign up to that premium access with precision to avoid multiple monthly payments at a time.

This doesn’t necessarily mean choosing one or the other. Spotify incrementally decreases the subscription price according to the number of people in one household who use it. Plus many service providers including Netflix, Stan, and Amazon Prime allow for multiple users; swapping passwords is the key.

Text message prompts are another proactive way of controlling your spending: set up alerts for every time your credit card is charged, plus you can also set up personalised notifications through your bank account easily – that way you won’t be able to ignore all those subscription charges adding up.

#2 Avoid paying full price online where you can

There’s nothing more convenient than shopping online, but before you click the checkout button, make sure you’re getting the best deal possible. From online plug-ins to digital apps, there are plenty of ways to avoid a full price-tag.

Retail shoppers can download free browser extensions like Honey, which automatically scan online stores and apply discount codes or vouchers whenever they are available.

Hungry city dwellers who shop around can almost always save on delivery, with food box delivery services Hello Fresh or Marley Spoon Box often offering first-time users a free deal. Most restaurants on Menulog provide at least 10% off first orders, while Foodora offers discounts when referring a friend. Sure, it takes some effort, but get around those discounts and you’ll have more cash leftover.

#3 Invest in stocks like a boss

Savings accounts are a great start for that hard-earned cash, but if you’re lazy and just let your money sit there, you’re missing out on earning some extra $$$.

If you’ve got a chunk of change to spare, think about investing in stocks – it’s actually a lot easier than you think. Thanks to some new digital tools, understanding how you can turn a profit by investing in the stock market is as simple as lifting a finger.

You can start with the popular Acorns app, which enables users to automatically invests spare change from everyday purchases into a diversified portfolio.

Just connect your debit or credit card to the app, which will round up all of your transactions to the nearest dollar, and automatically invest the change for you – for example, if you buy a coffee for $3.50, Acorns will round that up to $4.00 and invest that extra 50 cents on your behalf.

The app is designed to teach you about investing as you choose the level of risk you’re comfortable with and what kind of portfolio you prefer. But perhaps best of all, it doesn’t cost anything to start using.

Now, over 50,000 Australians users are reportedly on the user-friendly app – it’s just one easy way of making your spare change work for you.,

#4 Save on transport

Getting from point A to point B is part of everyday life but getting creative and saving on travel expenditure doesn’t take too much effort.

If you live in the city, car-share pods are scattered throughout most suburbs and are usually only a short walk from most locations. GoGet subscriptions start from as little as $12 a month, and when you cut out insurance, green-slips, stamp duty and mechanical repairs, an estimated $2000-$6000 a year can be saved.

Uber is also adding features to accommodate ride-sharing amongst an increasing amount of time-efficient travellers. With the added ability to input multiple stops into a single journey, splitting fares amongst multiple riders can be cheaper than the train or bus.

But if the convenience of owning a car is just too tempting, ASIC has launched a Moneysmart app allowing car buyers to easily compare prices across a range of options.

#5 Take the power back

Australians in the ‘90s enjoyed many things, from unforgettable TV shows like Round The Twist to some of the cheapest energy prices in the world. But fast forward to today, and we pay some of the highest rates for energy (on average, three times higher than our US friends).

And the introductory rates that some electricity companies use, offering discounts or offers to entice customers, are part of the problem. Often, these benefits expire after a fixed period such as 1 year, and the customer is then charged a more expensive rate that doesn’t reflect the retailer’s best available offer. Yep, you read that right: in this situation, customers get punished – rather than rewarded – for remaining loyal to an electricity provider.

So, if you’re complacent and don’t switch power companies, you can end up paying a pretty hefty lazy tax. In fact, in July this year, the Australian Energy Regulator estimated that some customers could save as much as $1,000 a year by switching to a better offer.

New energy companies are often better for the environment and can provide huge savings on monthly bills. By shopping around for a new energy provider, you can help keep the world green while saving hundreds a year.

Keen to switch your electricity to a better power company? Switch to Powershop. Their online usage tools let you know exactly how much power you’re using and what it costs, so there are no nasty surprises. Find out more here.

Inspired by Powershop Switch and you could save with Australia's Greenest Power Company (as ranked by Greenpeace).